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11 January 2019

11/01/2019

Morning Chat & Market Data

Morning Chat


Plunging fashions: Macy’s share price fell 17.66%, dragging Kohl’s and Nordstrom down over 8% at one point too driving S&P retailers down 1.7%. So after the recent positives, the S&P started with a negative tone Thursday, though closed +0.45%.  Macy’s problem was guidance.  Yet it wasn’t as bad as the drop implies.  A year ago, Macy’s guided for about 0.5% sales growth with shares about $26 on an 8.8x price earnings ratio (PE). In November, guidance was 2.4%, the shares $36 and PE 8.6x. Now? $26.11, on a PE 4.8x and 2% guidance. It highlights the increased worries over retail.

Oil be all right: Brent crude slipped slightly to close at $61.19 a barrel; West Texas at $52.32.  Considering both Brent and West Texas were over 18% lower on Christmas Eve, the oil price has gushed up quickly.  Like equity markets, the outlook for the US-China trade talks is key.  Crudely speaking, a deal means trade is not stifled meaning growth is not stifled meaning more demand for, well, oil.  The slight slide in yesterday’s oil price was because there wasn’t an ongoing drip of information confirming “the talks are going well”, but it’ll likely rally more when there is

Hey Senor, you wanna buy a car? Mexico thrives on exports – hence why they needed a trade agreement with the US.  Exports account for 31-32% of GDP and automotives for just over a fifth of that – say 7% of GDP.  So yesterday’s export and production data was pleasing.  Exports – seasonally down in December – steered to the highest December exports ever at 275,000 vehicles and closes out a year where auto exports – averaging 288,000 per month, 6% up on last year – have never been better.  Yes, production was a little down over lower domestic demand but the sector’s still motoring along.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +3.58 (+0.32%) at 1,120 (YTD: 3.42%; 5YR: 42.3%)
MSCI AC World Equities (USD) up +28.81 (+0.36%) at 8,080 (YTD: 3.97%; 5YR: 34.0%)
Barclays Global Aggregate Bonds up +0.22 (+0.05%) at 482 (YTD: 0.59%; 5YR: 5.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +11.68 (+0.45%) at 2,597 (YTD: 3.58%; 5YR: 40.9%)
NASDAQ up +28.99 (+0.42%) at 6,986 (YTD: 5.29%; 5YR: 67.3%)
Euro STOXX 50 up +5.49 (+0.18%) at 3,076 (YTD: 2.48%; 5YR: -0.9%)
FTSE 100 up +36.24 (+0.52%) at 6,943 (YTD: 3.19%; 5YR: 3.0%)
CAC 40 down -7.92 (-0.16%) at 4,806 (YTD: 1.58%; 5YR: 13.1%)
DAX up +28.27 (+0.26%) at 10,922 (YTD: 3.43%; 5YR: 15.3%)
Nikkei 225  up +195.90 (+0.97%) at 20,360 (YTD: 1.72%; 5YR: 28.0%)
Hang Seng up +164.86 (+0.62%) at 26,686 (YTD: 3.25%; 5YR: 16.8%)
MSCI Emerging Markets up +4.27 (+0.43%) at 999 (YTD: 3.42%; 5YR: 2.9%)
 
Selected Government Bond Yields
US 10 Year down -0.02 at 2.73 (began the year at 2.68; 5 years ago it was 2.86)
US 2 Year down -0.01 at 2.56 (began the year at 2.49; 5 years ago it was 0.37)
UK 10 Year up +0.01 at 1.27 (began the year at 1.28; 5 years ago it was 2.87)
Germany 10 Year down -0.15 at 0.25 (began the year at 0.24; 5 years ago it was 1.84)
France 10 Year down -0.11 at 0.67 (began the year at 0.70; 5 years ago it was 2.50)
Italy 10 Year down -0.64 at 2.90 (began the year at 2.74; 5 years ago it was 3.92)
Japan 10 Year down -0.12 at 0.01 (began the year at -0.01; 5 years ago it was 0.70)
Barclays EM Basket down -0.01 at 6.15 (began the year at 6.22; 5 years ago it was 5.79)
 
Selected Currencies
€/$ up +0.002 (+0.20%) at 1.153 (YTD: 0.67%; 5YR: -15.6%)
£/€ down +0.002 (-0.14%) at 1.107 (YTD: -0.57%; 5YR: -8.9%)
£/$ down +0.001 (+0.05%) at 1.276 (YTD: 0.09%; 5YR: -22.5%)
$/¥ down 0.00 (0.00%) at 108.39 (YTD: -1.17%; 5YR: 4.0%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.47 (+0.78%) at 60.92 (YTD: 14.58%; 5YR: -43.1%)
WTI Crude ($/bbl) down +0.23 (+0.44%) at 52.59 (YTD: 15.81%; 5YR: -43.3%)
Gold ($/ozt) up +7.75 (+0.60%) at 1294.39 (YTD: 0.93%; 5YR: 3.7%)
Copper ($/mt) down -28.00 (-0.47%) at 5930.00 (YTD: -0.59%; 5YR: -18.8%)
 
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return
 
SOURCES: BBC; The New York Times; FactSet; Al Jazeera; Financial Times; The Economist; Reuters; CNN; Wall Street Journal; CNBC; Google Finance; Seeking Alpha; The Idea Farm; Bloomberg, Twitter; Wikipedia; Investopedia; The Guardian; The Times of London; Google News; Numerous academic sources and journals; Trade bodies; Government institutions (e.g The Bank of England, The Federal Reserve).

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros